Tower Arch Capital Buys Intelligent Technical Solutions as First Step Into MSP Market

Private equity firm Tower Arch Capital has acquired MSP Intelligent Technical Solutions (ITS), which provides managed IT, cloud, cybersecurity, VoIP phone and fiber internet services to SMBs throughout the United States. Tower Arch didn’t say how much it’s paying for ITS; however, the investment completes a recapitalization with ITS’ founding management team.

This is the first MSP acquisition for Utah-based Tower Arch, whose portfolio includes everything from industrial services to consumer services. The deal will not be its last foray into the MSP market, the company said.

Tower Arch Capital’s Aubrey Burnett

Aubrey Burnett is a partner at Tower Arch.

“We’ve had other kinds of IT services-related investments, but this is our first pure-play MSP investment. Our goal would be to expand our footprint in the MSP space through ITS. We want to put more capital work here by investing more money into ITS for them to go and buy other companies and build their service offerings. But, yes, the goal is to expand to other MSPs.”

Expanding Headcount

ITS has offices in six U.S. cities and an international workforce that makes up half of its staff. The influx of capital from Tower Arch will allow ITS to expand its headcount.

Tom Andrulis is CEO of ITS.

ITS’ Tom Andrulis

“Ten years ago, we started expanding outside the U.S. We have a much bigger talent pool to pull from. And the other strategy we’ve been implementing for many, many years is just training people from within [the company]. It’s a lot easier to find people with potential that may not have the experience. We can pull people in with high potential and then teach them and have them grow up through the ranks.”

A strong workforce wasn’t the only factor ITS brought to the table that Tower Arch found appealing. ITS built out an “acquisition playbook” that designated roles internally in the company post-acquisition. They determined what roles individuals would take on to make sure everything from customer facing to ticketing systems were integrated successfully.

“Tom has been very thoughtful about building up his platform,” Burnett said. “He has all the resources internally needed to scale. This was really important to us. We wanted to make sure that we essentially had a strong backbone to build the rest of the business around. A big part of our thesis is continuing this pace of acquisitions to help business grow.”

Platform Transactions

Focus Investment Banking’s Abe Garver

Abe Garver is MSP team leader and managing director at Focus Investment Banking. He introduced Burnett to Andrulis.

“Having been the catalyst for nine MSP ‘platform’ transactions for private equity groups, a couple things stood out to me about this transaction. First, Tom is an M&A prodigy. The number of outstanding MSP targets that he was able to uncover in the time we’ve worked together is unlike anything I’ve ever seen before.

“Tower Arch Capital also stands out to me as an exceptional transaction partner to ITS because of its ability to listen closely to client’s objectives, and then craft a unique partnership proposal,” Garver added. “This offered not only compelling value today, but also an attractive upside opportunity for shareholders and employees as the company continues to grow.”